>Well, maybe not as suddenly. I don't expect that one day all the oil will
out and people will stop their cars on the Beltway and walk home. However,
something like the 1974 crisis could easily occur again.
Not to be too cheerfull, but we will never run out of oil. Last I hear,
known oil supplies will be exhausted in 70 years. But it's a misleading
number. I believe that it is more accurate to say that cheap oil supplies
will be exhausted in 70 years. For instance, even during the embargo,
Haitians had available all the oil that they could afford. Few people could
afford it though. Currently, the Saudi Arabian pump out oil at around $2-3
(?) per barrell. The North Slope is more like $15. As the cheaper oil
supplies are exhausted, we will work harder to get oil at a higher price.
So we'll never run out of oil. We just won't be able to afford it.
The only way we will be able to afford it is if we don't want it. For
instance, I have a long commute in a modestly efficient car--so that's
$60/per month in gas. It's not cost effective yet to buy the top efficiency
car (Civic VX at 59 mpg, or so I've heard) to save only $30/ month. When I
have to replace my current car, yes. But not now. If/when fuel triples in
price, the Civic will save me $90/month and it would be worth trading in my
Escort. And it may even be worth skipping the Civic and buying an electric
car at, say, $30,000 (today's prices) and saving $180/month.
Oil will invariably go up in cost and electric cars will invariably go down
in price (and up in performance). As those who find it cost effective to
switch to electric (or fuel efficient) cars do so, demand for oil will drop.
So we'll reach a balance point of slowing increasing oil costs and steadily
falling oil demand.
And if technology accelerates fast enough (i.e., increasing performance for
decreasing costs), both oil demand and oil price may crash as it becomes
just not worth it. Consider the inherent reliabilitiy of an internal
combustion engine at 1000's of moving parts, and an electric motor at 10's
of moving parts. It's like comparing vacuum tubes to semiconductors--at one
time vacuum tubes were more cost effective.
>But currently, the amount of installed solar/wind power is miniscule. I
assume it's all driven by economics, not idealism or environmentalism.
At one point the number of cars on the roads was miniscule, and they were
rarely cost effective.
There is a fair number of idealists buying solar (and I wince when I
calculate the cost of switching to solar, so I won't be one). In one case I
read about, they spent $13,000 to reduce demand from 65 kwhr/day to 13
kwhr/day, and another $23,000 for a solar cell system with utility intertie
(so they in principle sell power during the day, and buy it back at night).
It's obvious that the big savings are in efficiency.
Solar cells are cost effective when you need to run power lines, say at
$18-$30 per foot. So 1-2,000 ft of power line would tilt the above
application decidedly in favor of solar and efficiency measures. 4-8,000 ft
of power line would favor solar even without the efficiency measures, and 0
ft of power line would still make the efficiency measures cost effective!
In Outer Mongolia, all the rural power development is Wind & Solar cells.
Likewise many other third world countries.
One also can argue that our country is clinging to fossil fuels in spite of
economics, because financial, regulatory and tax structures were designed
for traditional fuels. For instance, build a $1million coal plant, burning
$1 million worth of coal every year. The $1 million of coal is an operating
expense, and so is deducted from pre-tax income, and you only have $1
million initial investment. Build the same capacity wind or solar facility
for $21 million, and no annual fuel cost. Same amount of money for the same
amount of electricity (ignoring inflation). But the solar facility requires
borrowing $21 million up front and takes 20 years or so to deduct the cost
off of taxes (depreciation).
Ignorence is also holding back renewable energy and energy efficiency. The
fact that the Green Lights participants get their money back in 2 yrs tells
me that their original system was designed in ignorence of available
technology. Furthermore, utilities have had a a mindset of
'sell-more-electricity', regardless of the cost of building the generating
capacity. Many utilities are learning that it is often cheaper to
essentially pay consumers to use less electricity by financing energy
efficiency measures--even with regulatory disincentives (since profits are
limited to a certain % of revenue, and energy efficiency reduces revenues as
well as expenses).
Some of the biggest purchasers of solar and wind generators are utilities,
because adding solar panels can be cheaper than running new power lines.
Also, solar is in step with peak load demand--during mid-day, when they
would normally fire up gas turbines which are more costly to run than base
Anyway, my conclusion is that time is on the side of renewable energy
sources and Royal Shell Oil's estimate of 50% renewable power sources in 50
years is reasonable. Most of us won't live long enough to see that day
though, unless the technologies develop really fast, and the
political/regulatory environment changes. Ultimately, I don't think Nuclear
will be able to compete with renewables.
What a long message--I hope it's not too long.
Grace & peace,